Nab, Anz To Market Health Insurance
Sydney Morning Herald
Wednesday June 4, 1997
Arch rivals ANZ Banking Group and National Australia Bank will battle it out in the insurance market, with both groups launching private health insurance products yesterday.
It is the first foray by Australian banks into the $4.5 billion private health insurance industry, with both looking to boost their revenue streams through low-cost, add-on products.
"We're now in the middle of a revenue crunch and we need to find alternative revenue streams such as fee-based services," said NAB spokesman Mr Haydn Park. "We obviously feel this could be a substantial revenue stream."
NAB has formed an alliance with Hospitals Contribution Fund of Australia.
HCF will pay NAB a fee for using its distribution network to expand its customer base, gaining access to the bank's extensive customer base.
ANZ has linked with National Mutual Health Insurance but declined to reveal the commercial arrangements of its agreement.
ANZ has also linked its health insurance product to its ANZ Gold Mastercard, offering customers a cash rebate if their health insurance premiums are debited to the mastercard.
The cash rebate will be dependent on how much is spent on the card.
It is a cheap entry for the banks into the health insurance industry, with no product production costs, and the prospect of earning more money from their captive customer base.
Macquarie Equities insurance analyst Mr Tony Jackson said the alliances would allow the banks to boost their return on equity, without having to hold capital on their balance sheets against the insurance products.
"It's just cream on the cake," Mr Jackson said. "They're punting that the changes in legislation will lead to a big increase in membership numbers but I don't think it will happen. I think it will just stabilise."
The Government introduced a private health insurance rebate scheme in last year's Budget to encourage consumers to take up private health insurance and reduce the burden on the public sector.
The private health insurance industry has been battling declining membership for the past twenty years and profitability has suffered.
Price increases on health insurance products and recent bad publicity have also made them less attractive propositions for consumers.
Medibank Private dominates the national private health insurance market, with 26 per cent, followed by MBF at 19.2 per cent, National Mutual at 11.5 per cent and HCF at 8.5 per cent.
© 1997 Sydney Morning Herald